WSJ: Videogame Giant Electronic Arts Near Roughly $50 Billion Deal to Go Private (UPDATE: Acquired by PIF, Silver Lake, and Affinity Partners)

[Diondon]

All I know is they gon want they mf money
No more GamePass

 

[Roid Jones]

I mean the saudis are currently funding Undisputed. Wonder if they roll that game over to EA or scrap it for Fight Night

They need to scrap that bullshyt

 

[CopiousX]

Could be better for business. Less focus on corporate profit. The sheik might just want a good game

Imagine being so rich you send your assistant out to cop FIFA and he comes back with the whole company

Private equity firms exist to do the exact opposite of this. The fact that those firms are in the deal means that they intend to gut the firm for all its value and then run it into the ground.


They have run out of traditional asset classes because they've bought up everything already . So they have to go into creative and speculative industries. And they've done the same thing in every single industry they have been in.


I expect less features in future games, more micro transactions, much more bugs, shorter season passees, far fewer patches once bugs are discovered, and mismatching nonsense text in cut scenes because the whole dev team has been outsourced to Napoleon incorporated.


And in the worst case scenario we may have have an EA bankruptcy by 2030. Such an outcome is considered a job well done for private equity.

 

[ORDER_66]

All I know is they gon want they mf money
No more GamePass

The FIFA license and NFL license gonna be milked to DEATH!!!!

 

[CopiousX]

its Saudi oil money they not going to let this flop lol

Its extremely profitable for private equity firms to destroy companies. The Saudis are in on the game too.

I know theyre gonna do layoffs... but the company still gotta pay off that debt if EA didnt have debt going into the sale then where did it come from???

Nope. That's not how private equity works. The goal is to suck as much value out of the company and then file for bankruptcy. The people who bought the company are skilled in structuring the deal in such a way that the purchased company is entirely separate from the private equity firms. They also use borrowed money to make the initial purchase so they have no skin in the game.


It's actually twofold Because the first set of debt came from the purchase, And normally in private equity the purchased company takes a second set of debt in order to pay the private equity firm a dividend which is much higher than their stake in the purchase price. Ultimately it's the banks that lose, But the banks who gave the initial loan end up selling the debt And it becomes a game of hot potato as to who is finally owed the debt.

So when it goes to bankruptcy court, The federal government trustees aren't allowed to go after the private equity or saudi people who bought the company and the debt just disappears.

 

[ORDER_66]

Nope. That's not how private equity works. The goal is to suck as much value out of the company and then file for bankruptcy. The people who bought the company are skilled in structuring the deal in such a way that the purchased company is entirely separate from the private equity firms. They also use borrowed money to make the initial purchase so they have no skin in the game.


It's actually twofold Because the first set of debt came from the purchase, And normally in private equity the purchased company takes a second set of debt in order to pay the private equity firm a dividend which is much higher than their stake in the purchase price. Ultimately it's the banks that lose, But the banks who gave the initial loan end up selling the debt And it becomes a game of hot potato as to who is finally owed the debt.

So when it goes to bankruptcy court, The federal government trustees aren't allowed to go after the private equity or saudi people who bought the company and the debt just disappears.

Yeah the other guy already explained it to me. this still sounds crazy like you bought a company for 55B but sadled them with 20B of debt they have to pay off... its wild... are these investors or just capitalist vultures who want to suck everything out of the company?!?! are they even gonna care about the games or is it just a money grab

 

[Dillah810]

Yeah the other guy already explained it to me. this still sounds crazy like you bought a company for 55B but sadled them with 20B of debt they have to pay off... its wild... are these investors or just capitalist vultures who want to suck everything out of the company?!?! are they even gonna care about the games or is it just a money grab

The bolded part is the answer

 

[Dillah810]

EA's new buyers reportedly hope AI can be used to cut operating costs and boost profits, just in case that $20 billion in debt wasn't already concerning enough

It's not clear exactly what AI might be used for, however

www.gamesradar.com

 

[Umoja]

This reminds me when the Glazers bought Man Utd. The team has been mid ever since. Be prepared for more egregious money making schemes.

The Glazer's bought United in 2005. They fell off in 2013 so they were not mid ever since.

However, I commend you for picking the right example because it is what I thought of.

They'll do well, like United, for a period of time off the strength of ongoing projects. What will kill them 10 years from now is the lack of investments preventing them from keeping pace with the competition.

As consumers, we'll probably be cool. The talent won't disappear, they'll just go elsewhere.

 

[Red Money]

EA and NFL exclusive deal expire after 2026 season.

I doubt the NFL will let EA have exclusivity given current events. NFL 2K could come back and other folks might get a chance.

 

[Slow Moving]

Its extremely profitable for private equity firms to destroy companies. The Saudis are in on the game too.




Nope. That's not how private equity works. The goal is to suck as much value out of the company and then file for bankruptcy. The people who bought the company are skilled in structuring the deal in such a way that the purchased company is entirely separate from the private equity firms. They also use borrowed money to make the initial purchase so they have no skin in the game.


It's actually twofold Because the first set of debt came from the purchase, And normally in private equity the purchased company takes a second set of debt in order to pay the private equity firm a dividend which is much higher than their stake in the purchase price. Ultimately it's the banks that lose, But the banks who gave the initial loan end up selling the debt And it becomes a game of hot potato as to who is finally owed the debt.

So when it goes to bankruptcy court, The federal government trustees aren't allowed to go after the private equity or saudi people who bought the company and the debt just disappears.

No need for fear mongering these type of companies buy at risk failing companies alot that is why they do what you listed.
Ea is a company that produces 1+ billion in net profit no chance they gut the company.
In 10 years they could probably flip the company for profit as long they pay the loan consistently.

 

[CopiousX]

No need for fear mongering these type of companies buy at risk failing companies alot that is why they do what you listed.
Ea is a company that produces 1+ billion in net profit no chance they gut the company.
In 10 years they could probably flip the company for profit as long they pay the loan consistently.

Once again, this isnt what private equity does anymore. This used to be the modus operandi of privaate equity in the 80s and 90s. Now they exclusively gut companies. They are not interested in fixing companies because it has lower margins than scrapping them for spare parts. The best they can do is increase cash flow by cost cutting and reducing product quality in order to finance their next purchase, but they arent fixing sht.



This is what modern private equity firms do. Its outright dystopian

 

[Roid Jones]

EA and NFL exclusive deal expire after 2026 season.

I doubt the NFL will let EA have exclusivity given current events. NFL 2K could come back and other folks might get a chance.

Why do y'all frame it like this? The NFL does not 'let' EA have the licence, it's a mutually beneficial partnership. I am yet to hear a good reason why the NFL would walk away from what has been an incredibly lucrative agreement.

 

[Redguard]

EA and NFL exclusive deal expire after 2026 season.

I doubt the NFL will let EA have exclusivity given current events. NFL 2K could come back and other folks might get a chance.

I think EA and the NFL extended their deal this year so it doesn't expire in 2026

 

[Legal]

The Glazer's bought United in 2005. They fell off in 2013 so they were not mid ever since.

However, I commend you for picking the right example because it is what I thought of.

They'll do well, like United, for a period of time off the strength of ongoing projects. What will kill them 10 years from now is the lack of investments preventing them from keeping pace with the competition.

As consumers, we'll probably be cool. The talent won't disappear, they'll just go elsewhere.

Yep, the usual course for this is that whatever was already in the pipeline gets pushed out, is middling to good, maybe great, makes some money, and calms down some of the noise. Then once layoffs, selloffs, and voluntary departures carve their output to the bare minimum, the shyt hits the fan. Given how long development cycles typically are, it'll stick to that usual 5-7 year cycle this private acquisitions usually follow.

Once again, this isnt what private equity does anymore. This used to be the modus operandi of privaate equity in the 80s and 90s. Now they exclusively gut companies. They are not interested in fixing companies because it has lower margins than scrapping them for spare parts. The best they can do is increase cash flow by cost cutting and reducing product quality in order to finance their next purchase, but they arent fixing sht.



This is what modern private equity firms do. Its outright dystopian

Exactly. Breh said "stop fear mongering," like we don't have several years full of examples of private equity operating exactly as described.